Wen Jiabao’s Family Assisted by Ping An’s Survival, NYT Says

By Angus Whitley -
Nov 25, 2012

Chinese Premier Wen Jiabao’s
relatives acquired shares in Ping An Insurance Co. (2318) after an
appeal in 1999 by the insurer to authorities averted the
company’s breakup, the New York Times reported, citing corporate
filings and copies of letters and records.

With Ping An threatened by insolvency after the Asian
financial crisis, Chairman Ma Mingzhe sought a waiver from a
rule that would force the company to be broken up, and he wrote
to then-Vice Premier Wen on Sept. 29, 1999, detailing the
insurer’s financial performance, the newspaper said.

After Ping An was granted the waiver, Taihong, a company
that would later be controlled by Wen’s relatives, bought shares
in Ping An in December 2002 for about a quarter of the price
paid by HSBC Holdings Plc (HSBA) two months earlier, the New York Times
reported. By 2007, the $65 million investment by Taihong was
worth $3.7 billion, and the relatives’ stake of that investment
probably peaked at $2.2 billion, according to the newspaper.

The New York Times reported last month that Wen’s relatives
had controlled assets worth at least $2.7 billion, including
holdings in Ping An, citing a review of corporate and regulatory
records.

In an e-mailed statement today that didn’t mention the New
York Times by name, Ping An said recent media coverage related
to the company contained “serious inaccuracies, facts being
distorted and taken out of context as well as flawed logic.”

’Adverse Impact’

Ping An has strictly complied with local listing rules and
regulations and will take “appropriate legal action
commensurate with the damage and adverse impact the media
reports have caused to the company,” according to the
statement.

China’s Foreign Ministry didn’t immediately reply to a fax
seeking comment today. The New York Times said Wen couldn’t be
reached for comment and Ma declined to comment.

It’s not known if Wen intervened on behalf of Ping An’s
request for the waiver, or if he was aware of the stakes held by
his relatives, the newspaper said. The New York Times said it
found no indication any law was broken, no evidence Wen held
Ping An shares under his name, nor any indication Wen shared
inside information with family members.

While Taihong, run by Wen family friend Duan Weihong, was
recorded as the Ping An shareholder, the beneficiaries of the
purchase lay behind investment vehicles controlled by relatives
of Wen, including two brothers-in-law, a sister-in-law, and
colleagues and business partners of his wife, Zhang Beili, the
newspaper said, citing corporate and regulatory documents.

Duan, in an interview with the newspaper, said she bought
the Ping An shares for her personal account and received all the
returns. Wen’s relatives appeared on the shareholding records by
accident, the newspaper said, citing the interview.

Editor: Paul Tighe

To contact Bloomberg News staff for this story:
Angus Whitley in Sydney at +61-2-9777-8643 or
awhitley1@bloomberg.net